Euro: the potential feedbacks are scary

Italy’s public debt hit an all-time high in June of almost 2 trillion euros and the annual budget deficit was also bigger than a year before, due largely to Italy’s share of bailouts for other euro zone states, the central bank said on Monday.

I’m not confident that this analysis is correct, but it sure bears consideration. There are some scary feedbacks that can excaberate the stresses of the periphery:

…This is why the monetary side is so critical. If both Spain and Italy move from the ranks of the bailing out to the bailed out, the fiscal burden on the rest of the euro area rises, pushing other members toward crisis.